High gas prices and our residents moving?!

Asked by Michael Thacker, Louisville, KY Mon Sep 9, 2013

Will gas prices as they creep upward force or convince the "working" (meaning not home based, but those having to drive to work) to move inward toward Louisville?

I have been having this discussion often lately with clients and friends and I am curious what your thoughts are?

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6
Mack McCoy, Agent, Seattle, WA
Sun Sep 22, 2013
BEST ANSWER
It's not just about the gas prices, it's also about the value of your time.

If you live an extra half-hour away from work, that's five hours a week, two hundred and fifty hours a year - fifteen 16-hour days of being awake and in the car. That's in addition to two gallons a day, 500 gallons a year, $2000 in fuel.

But - how much is your job worth? If you make $25K a year, that's $500 a week, $12.50 an hour, $100/day . . . add an hour to the commute and eight dollars in fuel, and so it's a nine-hour day for $92, $10.22 an hour - the commute is costing you $2.28 an hour!

If you make $75K, $1500/week, you probably have a longer day, too - maybe you're working 50 hours a week, so it's $300 a day, $30/hr. $292 after gas, $26.54 an hour, the commute is costing you $3.46 an hour.

So you're really paying for that extra commute, in terms of hard cash dollars and precious life time - if you're thinking about living in the suburbs to provide a better lifestyle for your family, realize that they're going to spend five extra hours a week without you, and it's going to cost a couple of thousand dollars a year just in gas! (we haven't even calculated the wear-and-tear on a car).

Now, $2000 may not seem like a lot, but it's $166/mo, and you can carry quite a bit more mortgage with $166/mo, can't you?!
0 votes
True. Price of living in suburbs: $166/month
Price of watching your kids build a tree fort or camp out in a tent (safely) in the backyard....Priceless. Financial vs. Emotional debate for the ages. Cause everybody makes their decisions based on rational financial common sense right? I love the logic on this one, Mack. Emotion trumps finacial decisions within reason though. So that's must weigh into the forecasting. I think Mack makes a good argument for families delaying their migration to the 'burbs but it is inevitably not great enough to prevent people from eventually moving. Case in Point: The West. It was costly in dollars, time, and one risked one's LIFE yet they still moved west!
Flag Tue Sep 24, 2013
Wow, thanks, Michael!
Flag Sun Sep 22, 2013
Mack, thats a great answer, wow! You brought up things that I haven't even thought about.
Flag Sun Sep 22, 2013
t.pedersen, Home Owner, La Grange, KY
Sat Sep 14, 2013
Move from a county with some of the best public schools in the state to one with some of the worst public schools in the state. My kids futures are too important to move because of the price of fuel or commuting costs.
1 vote
Bonnie Willi…, Agent, Floyds Knobs, IN
Tue Sep 10, 2013
Not likely. I believe the consumers had a taste of price hike in gas a few years back and the initial shock is gone. I am seeing gas being considered a staple in the monthly budget...and not a factor of where in the city to live.
1 vote
Darryl Shurg…, Agent, Ronkonkoma, NY
Sun Sep 22, 2013
I like the question. It leads to great discussion regarding financial decisions and certainly provocative debate. As developers and re-developers try to forecast the future trends of progress, we who serve the real estate industry must keep sharp and focused. I like stumbling on old threads from several years ago to read community sentiment. We can see if group intuitions were correct, how our opinions fared over time. Please let's have more discussion on this. My vote is no. I believe the sprawl to suburbia continues even in the face of inflation. There is always a portion of populace moving inward and one moving outward. But small families moving out of cities grow and are replaced by young singles / couples moving inwards...only to become part of exodus in later years. One could look at statistical data of birth rate in cities vs outlying suburbs. School enrollment figures, new housing starts .....
0 votes
Darryl,

Yes, I agree about looking at the older threads. I always find them pretty fascinating to see how we were thinking then versus how we think now! : )

On statistical data, I am a bit more skeptical since so much was skewed by our old economy and how it was to some degree propped up by the banking sector among others.

Thanks for your reply! : )
Flag Sun Sep 22, 2013
Michael Thac…, Agent, Louisville, KY
Sun Sep 22, 2013
I guess I should add some details to my question.

A persons budget is only so much, do you think that as budgets get strained by high gas prices would they have to either cut back in other areas to afford the commute to work in the city or give up their home in outlying counties and favor just moving in closer.

I hope that I cleared up some of my confusing question. : )

Michael
0 votes
Darryl Shurg…, Agent, Ronkonkoma, NY
Tue Sep 17, 2013
A very provocative question, Michael. I like it.

Fuel Inflation? How much cheaper could gas be elsewhere? Inflation has been kept fairly low during the recovery after 2008, however we can expect increase in the near future. This is a fact of economics.

the good news is that after price inflation several good things will also occur, though lagging. Wage Inflation, and Property Value Inflation. Don't expect those to come as immediate relief after price inflation on cost of goods and services, but they do catch up eventually.

So if you rent and have transient employment, you might not experience either of those economic benefits in the future :'( however if you are a homeowner with a FIXED rate mortgage and you are secure in your employment, then you will experience BOTH.

Some states near where I live have lower gas prices. In NY the price for 87 regular is around $3.90/gallon give or take. Over the bridge in NJ the price may be as much as $.60 cheaper. I would not move there just for lower gas prices as tolls and added commute would gobble up any savings there. Employment opportunity (for all working members of the family) are quite different, and property taxes are vastly different.

Personally I need much better reason to relocate than just the price of gas. And I have done exactly that....picked up and moved the whole family. But it wasn't for the price of gas.
0 votes
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